Bawang IPO 420 times subscribed
Herbal shampoo maker Bawang International (Group) Holding received more than HK$70 billion worth of orders from retail investors for its initial public offering, making it Hong Kong's most popular new share sale this year, sources said.
The retail tranche was more than 420 times covered, triggering a clawback mechanism that raised the retail portion of the HK$1.67 billion share issue to 50 per cent from the initial 10 per cent.
Brokers said their margin financing funds had been depleted shortly after the retail subscription opened on Monday.
'Most wealthy investors placed orders in enormous amounts and we received HK$1 billion worth of orders in the first 10 minutes [after subscription opened],' said Nelson Chan, a general manager at Bright Smart Securities.
The firm received margin financing orders totalling HK$3.1 billion for Bawang shares.
Given the heavy demand, sources said Bawang was expected to price its shares at the top end of the indicative valuation.
The shampoo maker offered 700 million new shares at HK$1.95 to HK$2.38 each, representing 17.1 to 20.8 times earnings for last year. HSBC and Morgan Stanley are the bookrunners.
Retail investors are betting heavily on Bawang as the previous three listings over the past two weeks yielded attractive returns on their first trading day despite the volatile stock market.
Mainland resources company Lumena Resources Corp, China Metal Recycling (Holdings) and furniture maker Hing Lee (HK) Holdings gained 19 per cent, 22.01 per cent and 39.22 per cent respectively on their debuts.
'Investors are definitely eyeing short-term returns but I must say fund managers are still really selective and will not buy at unrealistic valuations,' said Ronald Wan, the managing director of China Merchants Securities.
'The equity market is changing every minute so investors should pay close attention to the changing sentiment to avoid losses.'
Meanwhile, coal trading and logistics company China Qinfa Group raised HK$630 million after receiving overwhelming orders for its initial offering and fixing the share price at HK$2.52, sources said.
This was the top end of its indicative price range, which started at HK$2.
The retail tranche was 96 times oversubscribed and the institutional portion more than 10 times, sources said.
Trading of Qinfa shares is expected to begin on July 3.
China Everbright Capital is the bookrunner.
Frozen capital
The initial public offering by mainland shampoo maker Bawang International (Group) Holding is expected to lock up more capital than any other offering this year
This year top five IPOs in terms of frozen capital (HK$) and their subscription levels
Bawang $ 70.1b 420 times
361 Degrees International $ 8.8b 42 times
Real Gold Mining $ 7b 68 times
China Metal Recycling (Holdings)$ 6.9b 44 times
China Qinfa Group $ 6.1b 96 times
